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2006/10/31

How can a wiki help you build a "Blue Ocean Strategy" ?

The book "Blue Ocean Strategy", (Harvard Business School Press, February 3, 2005) by W. Chan Kim and Renée Mauborgne has exerted a great impact on the recent reflections on strategy. To get a sense of its influence, the following data is enough : it ranks #115 in Books in Amazon.com Sales Rank.

This article will try to assess what this strategy is all about and how it can be successfully implemented at a relatively low cost by using a wiki. It will argue why wikis and "Blue-Ocean Strategy" seems to fit perfectly each other. In fact, it will show how these two concepts share inextricable links and therefore how their complementary use creates more value than when they are set to work separately.

"Blue Ocean Strategy" ?(You may want to skip this part of the article if you are already familiar with Chan and Mauborgne book and/or ideas.)

Basically, pursuing a blue ocean strategy means focusing on the creation of new, unknown markets instead of operating only in the realm of current competitors on a given market. It is not only about valuing innovation (for this would be a quite common suggestion), but also about how to pack it into a coherent price/value/target offer, in a customer-centered way. Blue ocean are defined as markets that has not yet come into existence, as opposed to red ocean markets that owe their color to the "cut-throat competition" that takes place in them.

This approach puts a resolute emphasis on the importance of using "strategic moves" as the conceptual unit to interpret business and industries successes and failures :

"The strategic move that matters most to both an industry's long run profitable growth and that of individual companies is that repeated creation over time of new market space that captured a mass of buyers." (Chan and Mauborgne, 2005)

The problem then shifts to the question of the creation of such a strategy.

Learn to swim in a blue ocean : how to dig your own pool

Although this is too often ignored or simply forgotten, genuine strategy is a matter of long-term, consistently put into practice decisions. This implies that creating your own blue ocean strategy is not only an operational problem, but necessitates a specific underlying structure to be built. Wikis are the kind of tools meant to play this role. The real nature of the blue ocean theory has to be mastered to understand why. Indeed, most of the time, blue oceans are waiting right next to you in every industry. The basic example is of the Ford model T, of which very existence was enough to create the market of affordable cars. The new field did not lie outside the automobile market, but in its very heart.

The next step to consider is that, in a company, the people that are the most likely to be aware of where a new market could be searched for are almost ... everyone. Be it a salesperson in direct contact with buyers, an engineer or even a bubbling employee : all those who are implicated in your company potentially have ideas or information that could be used consistently in order to point towards new markets. This may first seem absurd : how may laypeople be more informed than a R&D team, for example ? What you should remember here is that your employees represent a great number of people that deal on a daily basis and come across all the aspects of your current business. Even though it means shifting usual assumptions on their heads, if you think about it, it makes sense : if an opportunity lies somewhere, you can guess that someone may have spotted it. The matter becomes, how do you get to know it ?

As you may have already guess, an answer lies in the power of wikis. By allowing people to communicate and participate on a global platform, and motivating them to do so, you will quickly see how unexpected knowledge pops out and builds itself. An insight can be complemented by another, and free editing means freedom for everyone to make its contribution, whatever its size. You have a tool that allows you to tap into the pool of knowledge of one of the most knowledgeable sets of people on a particular topic : those who work on it. Exploring and creating new land can be conducted much more efficiently by coordinating the efforts of a crowd than by asking a small team to do it. Give a quick glance at Wikipedia : do you imagine even 500 individuals writing more than 1,500,000 entries ? The best part is yet to come : first, this will not cost you a huge amount of money for you can ask your IT department to do it or buy it for less than $2,000 a month from a specialized company, and last, it can be put in place without modifying current organigrams, just by providing employees with an account and a guide on how to share their knowledge. Ask your questions, they will answer. Collectively, they know.

Once a potential new market has been identified, you will have to decide whether to "expand existing boundaries" or not. Chosing to do so, you will have to take care of some core features.

What are the main characteristics of a blue ocean strategy ?

The fundamental originality of the blue ocean approach will appear here. Indeed, a company should not focus only on innovation, but on a global offer. This offer is built on a relationship between consumer's utility level, price, costs and innovation. It is not only giving something new, it is giving something new that creates its own market through the advantages it offers to consumers at given price that in turn determines costs, rather than the classical cost-plus way. It is opening new perspectives, starting from different assumptions about the people that could constitute a market, and so on. A good blue ocean strategy should be rated positively when the following questions are asked : Does it have focus ? a good tagline ? Does it diverge from other players ? Important insights in all those areas can be gained from throwing the debate on the common floor. This is the best way to find out which aspects have to be dealt with and in what order of priority.

The authors suggest the use of a "strategic canvas" to diagnose the situation in an industry and subsequent opportunities. They recommend going through the following "four actions framework" :

Which of the factors that the industry takes for granted should be eliminated ?

Which of the factors that the industry takes for granted should be reduced below the industry's standard ?

Which of the factors that the industry takes for granted should be raised above the industry's standard ?

Which of the factors that the industry takes for granted should be created, that the industry never offered ?

This helps you figuring out what is the current situation and where an unsatisfied demand exists. At this stage of the implementation, on of the most important aspects to bear in mind is the need of a strong coordination in the determination of a potential alternative offer between different departments : marketing (finds an utility, chooses a price), production and accountancy (determine a cost). Here wikis act as interfaces between department that are not organically linked but still have to work closely together. They offer a flexible way of sharing and exchanging up-to-date information on a given project.

By now you came out with an offer that no one could ignore (or at least not enough people so that the market you expect to appear neglects to do so). The last stage may prove particularly tricky, but options to make it more secure do exist.

Getting things done, or dealing with execution as the keystone of the whole edifice

Now that your blue ocean strategy has been designed, you are likely to want to put it at work. This is maybe the more perilous part, for it implies a commitment from the whole organization to get things done properly. On your way to execute your strategy, you may be faced with two distinct sets of problems, and this is what this section deals with.

Organizational hurdles : your company currently operates with a given hierarchical framework, and to move towards your new strategy you may have to reconfigure it. To do so smoothly, a good thing to think about is using your wiki to get people at work on some kind of a parallel way to their usual job. Business as usual, but everybody can spend 30 minutes or one hour a day to explore the ideas, contribute, discuss, assess, interact with others without having to move from their desks. Instead of holding long and useless meetings, you can use this virtual environment to structure the contributions on the definition and important points of your strategy. Instead of turning your whole organigram topsy-turvy, get things done through the network.

Management hurdles : how do you get people to embrace change ? The best way to attain this is by having them contributing to the process of change, and this is precisely what I recommend that you should have been doing from the start. Your new strategy will produce results only if supported by your staff, and if they actively contributed to it this is much more likely to happen. People don't like to be left behind, hence you should not do so when pushing change forward. If you followed the previous steps, your staff is likely to be pushing you in order to find out what the outcome will be. Given human capital is the biggest resource of enterprises in an era of service-focused economy, this is simply great.

Cost : I said 2, and this is a third point, but it is worth mention. The whole solution I've been putting forward throughout this article will not cost you more than $1000 a month in terms of the technical solution, to which some formation cost (presentation seminar) have to be added. Think about what it would have mean to restructure whole departments and build your point of view on the question ...

Some drawbacks may exist and have to be considered

Once again, shortcomings of two king may arise :

Those commonly associated with the use of wikis that I deal with in my previous article.

Information sharing. Clearly, you have to rely on the fact that all the information that is dealt with on your corporate wiki will not end up in the wrong hands. This problem exists in all companies as soon as a new strategy is to be put forward. Think about it this way : if you try to hide and retain information and a leak happens, you will never know what exactly has been leaked, who did it, and so on. If all your information is in the same place (this is reliable for the technical security of wikis is quite good, especially when behind your company's firewall), you are immediately able to compare what is known and what is not. You have a clear view of the situation and are able to react effectively and quickly. Balance this with the numerous advantages of using a wiki, and make your choice. But the shift towards free flows of information inside an enterprise clearly require an evolution f current mindsets and is a challenge to the use of wikis - a challenge worth tackling.

Conclusion

I hope that I have enlightened some of the interesting aspects of shifting to a wiki-backed blue ocean strategy. Even though this creates specific sets of issues to be dealt with, it is definitely a winning approach. The question is, will you choose to sail your corporate wiki towards further blue oceans ?

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